Will India's Stock Market Continue to Outpace China?

The stock markets of India 🇮🇳 and China have experienced contrasting fortunes in the past decade. Since September 2008, the Nifty 50 index has surged 5x 🚀 while the SSE Composite Index is up just 50%.

Despite China’s 🇨🇳 enviable growth in the last 30 years, concerns over its transparency and an authoritative government have acted as headwinds for equity investors. In fact, the SSE Index touched record highs in October 2007 and has since burnt significant investor wealth.

The below chart from Visual Capitalist outlines six major red flags that point to a slowdown in China 👀:

1. GDP growth in Q2 slowed to 0.8% compared to the 2.2% growth in Q1.
2. A post-pandemic recovery in exports is offset by weak consumer demand
3. The consumer price index moved into deflationary territory
4. Youth unemployment rate was the highest ever in July 2023
5. The Chinese Yuan hit a 16-year low against the USD in August 2023
6. New bank loans are at the lowest levels in 14 years

Other challenges include China’s real estate 🏡 collapse, which accounts for 30% of GDP, and the government crackdown on tech companies.

On the other hand, institutions and investors are bullish on India, given that it is the fastest-growing ⬆️ major economy this year. Higher consumer spending 💰 and an increase in purchasing power for the Indian middle class has also attracted foreign direct investments.

Will the Indian markets continue to outpace China in the upcoming decade?